Frank Lichtenberg, 08 February 2019

Given the relationships between innovation and growth and between growth and longevity, it seems likely that new ideas have played a major role in increased longevity. This column examines the impact of medical innovation on cancer survival rates and mortality in the US. The findings suggest that a significant share of the increase in the five-year observed survival rate between 1994 and 2008 may have been due to an increase in the novelty of medical ideas several years earlier. Turning to the impact of new cancer drugs specifically, it finds that drugs launched in 36 countries during 2006-2010 reduced the number of disability-adjusted life years lost to cancer in 2015 in those countries by about 8.7%.

Michael Kremer, Christopher Snyder, Natalia Drozdoff, 29 January 2016

Many observers believe that pharmaceutical firms prefer to invest in drugs to treat diseases rather than vaccines. This column presents an economic rationale for why such a pattern may emerge for diseases like HIV/AIDS. The population risk of such diseases resembles a Zipf distribution, which makes the shape of the demand curve for a drug more conducive to revenue extraction than for a vaccine. Based on revenue calibrations using US data on HIV risk, the revenue from a drug is about four times greater.

Charles Manski, 01 October 2014

Clinical practice guidelines recommend treating all patients with similar attributes the same way. This column argues that, under conditions of uncertainty or ambiguity, this may be bad advice. Treating similar patients differently provides two benefits. The first is diversification – assigning similar patients to different treatments limits the consequences of choosing an inappropriate treatment. The second benefit is that randomly assigning treatments helps clinicians learn which ones are most effective.

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